Information technology remained the most attractive sector among private equity and venture capital dealmakers in the third quarter despite the impact of the coronavirus.
In the third quarter, the total number of deals in IT surged ahead of other sectors, reaching 1,537 entries for the year to Sept. 30, according to S&P Global Market Intelligence data. Technology-focused assets have seen particular demand during the coronavirus pandemic as consumers look for online solutions.
However, in terms of year-on-year figures for the IT sector, private equity's overall cautious approach to dealmaking in 2020 is evident. Entries dipped by 17% to 443 in the third quarter for the most popular sector from 533 deals across the same period in 2019. Announced aggregate gross transaction value for IT entries in the third quarter was $9.97 billion, down by 32% year on year.
Total activity for the IT sector in 2020, including add-on transactions, hit 1,931 deals with a gross transaction value of $36.18 billion.
Some big IT deals concluded during the third quarter. Bain Capital Pvt. Equity LP's investment of $750 million in convertible notes in enterprise cloud computing company Nutanix Inc. was the largest IT entry, according to S&P Global Market Intelligence data. The investment will support Nutanix's growth initiatives, it said in a release. This was followed closely by Thoma Bravo LLC's $732.94 million take-private deal for cloud insurance software services company Majesco. The third-largest was Corsair Capital LLC with the announced acquisition of World Fuel Services Corp.'s Multi Service payment solutions business for $375 million.
The second-most-active sector for private equity entries was healthcare, which has also seen demand in response to the pandemic with 787 entries announced for the year to Sept. 30. Combined with add-ons, 1,141 deals were completed in the sector. It also saw the highest announced gross transaction volume of $45.21 billion across entries and add-ons in 2020.
The two largest healthcare entries in the third quarter were financing rounds. SoftBank Vision Fund 2, PICC Capital Investment Management Co. Ltd., and Morningside Venture Capital co-led a series C funding round in pharmaceutical technology company XtalPi Inc., which raised $318.8 million. Bain Capital Life Sciences Investors LLC and Perceptive Advisors LLC also led a $270 million series C funding round in biotechnology startup Freenome Inc.
In terms of add-ons for the year to Sept. 30, the industrials sector made up the bulk of activity with 451 deals announced, while financials saw the highest gross transaction value of any sector for add-ons at $22.4 billion across 244 deals.